Chancellor George Osborne delivered a half-yearly budget update to parliament this afternoon, in which he was expected to make another serious round of tax cuts and to give an update on debt reduction as a percentage of GDP. Key points from Osborne’s speech include a u-turn on welfare cuts and a much heralded change to the ‘tampon tax’.
On the area of debt reduction, Osborne stated:
“Our Charter for Budget Responsibility commits us to reducing the debt-to-GDP ratio in each and every year of this parliament, reaching a surplus in the year 2019-20, and keeping that surplus in normal times. I can confirm that the OBR has today certified that the economic plan we present delivers on our commitment.”
Debt forecasts were also lower:
“Debt was forecast in July to be 83.6 percent of national income this year. Now, today, in this Autumn Statement, they forecast debt this year to be lower at 82.5 percent. It then falls every year, down to 81.7 percent next year, down to 79.9 percent in 2017-18, then down again to 77.3 percent and then 74.3 percent, reaching 71.3 percent in 2020-21.”
After protests by women across the country, George Osborne has announced plans to scrap VAT on sanitary products. During the time it takes to scrap the tax, he says the £15m a year the tampon tax raises will go towards women’s health charities.
Scrapping planned changes to tax credits – Tax credits are being phased out anyway as we introduce universal credit. What that means is that the tax credit taper rate and thresholds remain unchanged.
The biggest announcement in the review was the scrapping of plans to reduce state support and tax credits. Osborne said:
“I can tell the House (of Commons) that the 12 billion pounds of welfare savings we committed to at the election, will be delivered in full, and delivered in a way that helps families as we make the transition to our new National Living Wage.”
He added that the improvement in public finances meant he could deliver his overall £12 billion welfare savings without the cuts.
Andy Burnham had warned that the police budget “could be cut by 10%” but Osborne announced that there will be “no cuts” in the police budget”. He added, “there will be real-terms protection for police funding.”
Miranda Wadham on 25/11/2015